The informal organization refers to the social structures and relationships that develop among people in an organization outside of official procedures and hierarchies. It consists of norms, personal connections, social networks, and communities of shared interests that influence how work gets done and people interact. If nurtured effectively, the informal organization can complement the formal organization by accelerating responses to unexpected events, fostering innovation, and enabling collaboration across boundaries. However, it also presents challenges like resistance to change, role conflicts, and pressure for conformity. Managing the interplay between the formal and informal aspects of an organization is important for effectiveness.

1. Informal Organization

2. The informal organization is the interlocking social
structure that governs how people work together in
practice.
It is the aggregate of, norms, personal and professional
connections through which work gets done and
relationships are built among people who share a
common organizational affiliation or cluster of
affiliations.
It consists of a dynamic set of personal
relationships, social networks, communities of
common interest, and emotional sources of
motivation.
The informal organization evolves, and the
complex social dynamics of its members.

3. • Tended effectively, the informal organization
complements the more explicit structures, plans,
and processes of the formal organization:
• it can accelerate and enhance responses to
unanticipated events, foster innovation, enable
people to solve problems that require
collaboration across boundaries, and create
footpaths showing where the formal organization
may someday need to pave a way.

4. The informal organization and the
formal organization
The nature of the informal organization
becomes more distinct when its key
characteristics are juxtaposed with those of
the formal organization.

5. Informal Organization:
Characteristics
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evolving constantly
grass roots
dynamic and responsive
excellent at motivation
requires insider knowledge to be
seen
treats people as individuals like
Flat and fluid
cohered by trust and reciprocity
difficult to pin down
collective decision making
essential for situations that change
quickly or are not yet fully
understood
Formal Organization:
Characteristics
• enduring, unless deliberately
altered
• top-down
• static
• excellent at alignment
• plain to see
• equates “person” with “role”
• hierarchical
• bound together by codified rules
and order
• easily understood and explained
• critical for dealing with situations
that are known and consistent

6. • Historically, some have regarded the informal
organization as the byproduct of insufficient formal
organization—arguing, for example, that “it can hardly
be questioned that the ideal situation in the business
organization would be one where no informal
organization existed.”
• However, the contemporary approach—one suggested
as early as 1925 by Mary Parker Follett, the pioneer of
community centers and author of influential works on
management philosophy—is to integrate the informal
organization and the formal organization, recognizing
the strengths and limitations of each.

7. Functions of informal
Keith Davis suggests that informal groups serve
at least four major functions
within the formal organizational structure.

8. 1. Perpetuate the cultural and social values:
They perpetuate the cultural and social values that the
group holds dear.
Certain values are usually already held in common among
informal group members. Day-to-day interaction reinforces
these values that perpetuate a particular lifestyle and
preserve group unity and integrity.
For example, students in a classroom may contain several
informal groups that constitute the informal organization
within the formal structure of the class. These groups may
develop out of fraternity or sorority relationships, dorm
residency, project work teams, or seating arrangements.
Dress codes, hairstyles, etc.

9. 2. Provide social status and satisfaction:
They provide social status and satisfaction that
may not be obtained from the formal
organization.
In a large organization (or classroom), a worker (or
student) may feel like an anonymous number
rather than a unique individual.
Members of informal groups, however, share jokes,
eat together, play and work together, and are
friends-which contribute to personal esteem,
satisfaction, and a feeling of worth.

10. 3. Promote communication among members:
The informal group develops a communication
channel or system (i.e., grapevine) to keep its
members informed about what management
actions will affect them in various ways. Many
astute managers use the grape- vine to
"informally" convey certain information about
company actions and rumors.

11. 4. Provide social control:
They provide social control by influencing and
regulating behavior inside and outside the group.
Internal control persuades members of the group to
conform to its lifestyle.
For example, if a student starts to wear a coat and tie to
class, informal group members may fool and convince
the student that such attire is not acceptable and
therefore to return to sandals, jeans, and T-shirts.
External control is directed to such groups as
management, union leadership, and other informal
groups.

12. Disadvantages of informal groups
Informal organizations also possess the following
potential disadvantages and problems that require
astute and careful management attention.
1. Resistance to change
Perpetuation of values and lifestyle causes informal
groups to become overly protective of their "culture"
and therefore resist change.
For example, if restriction of output was the norm in an
autocratic management group, it must continue to be
so, even though management changes have brought
about a more participative administration.

13. 2. Role conflict:
The quest for informal group satisfaction may lead members
away from formal organizational objectives.
What is good for and desired by informal group members is not
always good for the organization.
Doubling the number of coffee breaks and the length of the
lunch period may be desirable for group members but costly
and unprofitable for the firm.
Employees' desire to fulfill the requirements and services of
both the informal group and management results in role
conflict.
Role conflict can be reduced by carefully attempting to integrate
interests, goals, methods, and evaluation systems of both the
informal and formal organizations, resulting in greater
productivity and satisfaction on everyone's behalf.

14. 3. Rumor:
The grapevine dispenses truth and rumor with equal
vengeance.
Ill-informed employees communicate unverified and
untrue information that can create a devastating effect
on employees.
This can undermine morale, establish bad attitudes, and
often result in deviant or, even violent behavior.
For example, a student who flunks an exam can start a
rumor that a professor is making sexually harassing
advances toward one of the students in class. This can
create all sorts of ill feelings toward the professor and
even result in vengeful acts.

15. 4. Conformity
Social control promotes and encourages conformity
among informal group members, thereby making them
reluctant to act too aggressively or perform at too high
a level.
This can harm the formal organization by stifling
initiative, creativity, and diversity of performance.
In some British factories, if a group member gets "out of
line”, tools may be hidden, air may be let out of tires,
and other group members may refuse to talk to the
deviant for days or weeks. Obviously, these types of
actions can force a good worker to leave the
organization.

16. Benefits of the informal organization
Although informal organizations create unique
challenges and potential problems for
management, they also provide a number of
benefits for the formal organization.

17. Benefits of Informal Org
1. Blend with formal system:
Formal plans, policies, procedures, and standards
cannot solve every problem in a dynamic
organization; therefore, informal systems must
blend with formal ones to get work done.
in 1951, Robert Dubin "informal relations in the
organization serve to preserve the organization
from the self-destruction that would result from
literal obedience to the formal policies, rules,
regulations, and procedures.“

18. 2. Lighten management workload:
Managers are less inclined to check up on workers when they
know the informal organization is cooperating with them.
This encourages delegation, decentralization, and greater
worker support of the manager, which suggests a probable
improvement in performance and overall productivity.
Ex: When a professor perceives that students are
conscientiously working on their term papers and group
projects, there are likely to be fewer "pop tests" or
impromptu progress reports. This eases the professors load
and that of the students and promotes a better relationship between both parties.

19. 3. Fill gaps in management abilities:
For instance, if a manager is weak in financial planning
and analysis, a subordinate may informally assist in
preparing reports through either suggestions or direct
involvement.
Act as a safety valve.
When employees experience frustration, tension, and
emotional problems with management and other
employees, the informal group provides a means for
relieving these emotional and psychological pressures
by allowing a person to discuss them among friends
openly and candidly.

20. 4. Encourage improved management practice:
Perhaps a subtle benefit of informal groups is that they
encourage managers to prepare, plan, organize, and
control in a more professional fashion.
Managers who comprehend the power of the informal
organization recognize that it is a "check and balance"
on their use of authority.
Changes and projects are introduced with more careful
thought and consideration, knowing that the informal
organization can easily kill a poorly planned project.

21. 5. Understanding and dealing with the
environmental crisis:
widespread introduction of informal networks
or Information Routing Groups are essentially
a description of social networking services
both internally and externally.

22. Business approaches
1. Rapid growth.
Howard Schultz said, “You can’t grow if
you’re driven only by process, or only by the
creative spirit. You’ve got to achieve a fragile
balance between the two sides of the
corporate brain.”

23. 2. Learning organization.
Following a four-year study of the Toyota Production
System, Steven J. Spear and H. Kent Bowen concluded
in Harvard Business Review that
the legendary flexibility of Toyota’s
operations is due to the way the scientific method is
ingrained in its workers – not through formal training
or manuals (the production system has never been
written down) but through unwritten principles that
govern how workers work, interact, construct, and
learn.

24. 3. Idea generation.
"There's this continuum between total chaos
and total order,“
recognize the difference between those
two and encourage both to occur.